(1) Prepare journal entries to record the following transactions of a newly setup company during the current year: 1 Jan Purchased an existing factory building with the surrounding land for $25,000,000 cash. Stamp duty was at 10% of the purchase price, estate agent commission was 1% of the purchase price, and $50,000 was spent to perform a title search relating to the estate. An agreement was also signed with a landscaping provider to provide regular maintenance on the estate for the next 2 years, at the cost of $7000 per year to be paid on 31 December of each year. The entire purchase was financed in cash. An appraisal of the land and building at the time of purchase indicated that the market value of the land was $20,000,000 and the market value of the building was $12,000,000. The land has an indefinite useful life whereas the building is expected to have a useful life of 50 years. Residual value for building is estimated to be $1,000,000. The building is to be depreciated using the straight-line method.
